David Cameron is facing a complete breakdown in relations with his mandarins as a secret blueprint to break up the civil service is revealed today.

The plans put the country's 434,000 civil servants into four geographical pay zones, with those living in the south-west, on the south coast, Wales, much of the Midlands and the north-east earning least. Those in inner and outer London will be highest paid, followed by civil servants working in a corridor stretching from Bristol to the Thames estuary, and those in pay "hotspots" in Manchester and Birmingham.

The Cabinet Office's Reward, Efficiency and Reform Group (Rerg), assisted by the Hay Group private consultancy, has drawn up a "local pay map" that will form the basis for how civil servants' pay is set for the next three years. It is understood ministers are working on estimates that show average earnings in the north-east are 10% lower than the UK average, 6% lower in the West Midlands, and 7% lower in Yorkshire and the Humber.

However, the plans threaten to push relations with the civil service – already strained over the reform agenda – to breaking point.

Ian Watmore, 53, who was in charge of cutting costs across departments and headed Rerg, quit last week, six months after he became permanent secretary at the Cabinet Office, following a series of disagreements with his minister, Francis Maude.

Huge consternation has followed the leaking of details last week of a fiery meeting between Sir Bob Kerslake, head of the civil service, and the prime minister's director of strategy, Steve Hilton, who was reported to have voiced his frustration at the "failure" of the bureaucracy to implement his more radical ideas.

Hilton, who left Downing Street last week, is reported to have proposed that 90% of the work done by civil servants could be outsourced to thinktanks, charities and private companies.

Kerslake tweeted on Saturday: "Back in Sheffield after an interesting week. I am a champion of change in the civil service but I will also defend what is good about it. We need to hang on to [civil service] values – integrity, honesty, objectivity, impartiality." Lord Turnbull, former head of the civil service, was also critical of Hilton's views. He said: "I have no problem with supplementing with special advisers and consultants, but as a replacement it is based on a very oversimplified view."

Sir Andrew Cahn, who headed the government's UK Trade and Investment department until 2011, said ministers should stop briefing against civil servants, who he claimed had reacted well to the challenges set by the government. He said: "What the ministers are saying to the civil servants is 'we want radical change at the same time we want radical downsizing'. That is a big ask, but it is a legitimate and proper ask and it's unhelpful if ministers go public and start criticising civil servants."

On Saturday, the shadow cabinet office minister, Gareth Thomas, said the government was in danger of losing any remaining goodwill and appeared to be "waging war on the pay of hard-working, often lowly paid, public servants".

Mark Serwotka, general secretary of the Public and Commercial Services Union, said his union would fight the plans because regional pay threatened to stifle rather than stimulate growth in the poorest parts of the country.

"What we can now see is that, on top of a pay freeze, it would be permafrost for public servants in Wales and most of the rest of the UK, with no prospect of a pay rise for years," he said. "This is a very crude, but calculated, plan to cut public sector pay even further, and will do nothing to help low-paid workers in the private sector or local economies crying out for investment."

TUC general secretary Brendan Barber said: "Regionalising pay will deal local economies a further damaging blow, risk causing recruitment problems in our public services outside London and the south east, and won't help local businesses take on new staff either."

A Cabinet Office spokesperson said: "We don't comment on leaks. In the civil service, pay is usually set on a 'one size fits all' basis at a national level, whereas in the private sector pay is set in accordance with local labour markets. This means civil servants are often paid more than private sector workers in similar jobs in the same area, which has the potential to hurt private sector businesses."